The Anatomy of Debacles

PublishedJanuary 7, 2013

I was satisficing. If only I had known.

What’s a debacle? According to Paul Nutt, it’s “…merely a botched decision that attracts attention and gets a public airing.” Nutt goes on to write that his “…research shows that half of the decisions made in business and related organizations fail.” Actually, it may be higher because, “failed decisions that avoid a public airing are apt to be covered up.”

Remember that I wrote not long ago (click here) that perhaps 70% of change management efforts fail? Now we learn that half — or more — of all business decisions fail. We’re not doing so well. Nutt has studied over 400 debacles — botched decisions that became public disasters — and has created an anatomy of why and how they happen. Nutt’s book, Why Decisions Fail, is a sobering look at how we manage our organizations and, more specifically, our decisions.

Critical thinking should help us avoid botched decisions and public debacles. I’ll be writing about critical thinking over the next several months and, from time to time, will pull ideas from Nutt’s book. Today, let’s set the stage by looking at the basics. Nutt writes that blunders happen because of three broad reasons:

Failure-prone practices — Nutt claims that two-thirds of business decisions are arrived at via common practices that are known to fail. One of our problems is that we typically don’t analyze the decision-making process itself. We tend to ask, “how can we correct the problem?” rather than “how did our decision-making process lead us astray?” As an example, Nutt notes that “Nearly everyone knows that participation prompts acceptance, but participation is rarely used.”

Premature commitments — Nutt writes that “Decision makers often jump at the first idea that comes along and then spend years trying to make it work.” In the vocabulary of critical thinking, this is known as satisficing or temporizing — two heuristics that can lead us astray. Nutt concludes that, “A rush to judgment is seductive and deadly and can be headed off.” I’ll write more on how to head it off in future articles.

Wrong-headed investments — the basic problem here is that we spends lots of time, energy, and money to demonstrate that our decision is correct and the ideas behind it are sound. We call it an evaluation but really, it’s a justification. It’s better to invest our energy in clarifying objectives, discovering issues (and opportunities), and identifying measures of risk and benefit.

Nutt also criticizes contingency theory — the idea that your situation dictates your tactics. For instance, if you’re faced with a community boycott, you should do X; if you’re faced with cost overruns, you should do Y. Nutt concludes that, “Best practices can be followed regardless of the decision to be made or the circumstances surrounding it.” The bulk of his book outlines what those best practices are.

Of course, there’s a lot more to it. I’ll outline the highlights in future posts and put Nutt’s findings in the general context of critical thinking. I hope you’ll follow along. In the meantime, don’t make any premature commitments.